**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**FORM
      10-QSB**





(MARK
      ONE)


**xQUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE**


**ACT
      OF 1934**





For
      the
      quarterly period ended June 30, 2007





OR





**oTRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**





For
      the
      transition period from ________ to ________.





Commission
      File No. 000-27277





**VOCALSCAPE
      NETWORKS, INC.**





(Exact
      name of registrant as specified in its charter)





**NEVADA**
            **98-0207554**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)





170
      E.
      Post Road, Suite 206


White
      Plains, New York 10601


(Address
      of principal executive offices, zip code)





(914)
      448-7600


(Registrant’s
      telephone number, including area code)





(Former
      name, former address and former fiscal year,


if
      changed since last report)





Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes xNo
o




As
      of
      August 17, 2007, there were171,244,755 shares of the Registrant’s common stock,
      $0.001 par value per share, outstanding, and 35,000 shares of Series A
      Convertible Preferred Stock outstanding, and 25,000,000 shares of Class A Common
      Stock, $0.001 par value per share, outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes o No
x





Indicate
      by check mark whether the registrant is a shell company (as defined in Exchange
      Act Rule 12b-2 of the Exchange Act):Yes oNo
x







**VOCALSCAPE
      NETWORKS, INC.**


**QUARTERLY
      REPORT ON FORM 10-QSB**


**FOR
      THE PERIOD ENDED JUNE 30, 2007**





**INDEX**


**Index**
              
              **Page****Part
                  I.**
              **Financial
                  Information**Item
                  1.
              Financial
                  Statements
              1Consolidated
                  Balance Sheet as of June 30, 2007 (unaudited)Consolidated
                  Statements of Operations - for the three and six months ended June
                  30,
                  2007 and2006(unaudited)Consolidated
                  Statements of Cash Flows for the six months ended June 30, 2007
                  and2006
                  (unaudited)Notes
                  to Unaudited Consolidated Financial StatementsItem
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results ofOperations
              1Item
                  3.
              Controls
                  and Procedures
              1**Part
                  II.**
              **Other
                  Information**Item
                  1.
              Legal
                  Proceedings
              4Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              4Item
                  3.
              Defaults
                  Upon Senior Securities
              4Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              4Item
                  5.
              Other
                  Information
              4Item
                  6.
              Exhibits
              5**Signatures**
              5**Certifications**
              6








CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS





This
      Form
      10-QSB release contains “forward-looking statements.” In some cases, you can
      identify forward-looking statements by terminology such as “may,” “will,”
“should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative of such terms
      and other comparable terminology. These forward-looking statements include,
      without limitation, statements about our market opportunity, our strategies,
      competition, expected activities and expenditures as we pursue our business
      plan, and the adequacy of our available cash resources. Although we believe
      that
      the expectations reflected in the forward-looking statements are reasonable,
      we
      cannot guarantee future results, levels of activity, performance or
      achievements. Actual results may differ materially from the predictions
      discussed in these forward-looking statements. The economic environment within
      which we operate could materially affect our actual results. Additional factors
      that could materially affect these forward-looking statements include, among
      other things, the company’s ability to (i) adapt to rules and regulations that
      may be promulgated that affect how Vocalscape must conduct its
      Voice-over-Internet Protocol business and operations; (ii) market and distribute
      its Voice-over-Internet Protocol services; (iii) secure capital to continue
      operations; (iv) achieve and manage growth; and (v) develop or acquire new
      technology to effectively provide new and/or better services. Additional factors
      that will impact the company’s success include the company’s ability to attract
      and retain qualified personnel; the voting decisions of Robert Koch, who
      controls approximately 78% **** of
      the
      voting power of all securities of Vocalscape; and other factors discussed in
      Vocalscape’s filings with the Securities and Exchange Commission
      (“SEC”).





Our
      management has included projections and estimates in this Form 10-QSB, which
      are
      based primarily on management’s experience in the industry, assessments of our
      results of operations, discussions and negotiations with third parties and
      a
      review of information filed by our competitors with the Securities and Exchange
      Commission or otherwise publicly available. We caution readers not to place
      undue reliance on any such forward-looking statements, which speak only as
      of
      the date made. We disclaim any obligation subsequently to revise any
      forward-looking statements to reflect events or circumstances after the date
      of
      such statements or to reflect the occurrence of anticipated or unanticipated
      events.





**PART
      I. FINANCIAL INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS.**




1
  **Vocalscape
        Networks, Inc. and Subsidiary**
  Index
        to
        Consolidated Financial Statements
 
 Page(s)Consolidated
                  Balance Sheet (unaudited)
              3Consolidated
                  Statements of Operations (unaudited)
              4Consolidated
                  Statements of Cash Flows (unaudited)
              5Notes
                  to Consolidated Financial Statements (unaudited)
              6-22
  2
 Vocalscape
          Networks, Inc. and Subsidiary
 Consolidated
          Balance Sheet
 June
          30,
          2007
 (Unaudited)
  **ASSETS****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              -Total
                  current assets
              
              
              -Investment
                  in non-marketable equity securities
              
              
              17,290Property
                  and equipment, net
              
              
              21,447Development
                  costs, net
              
              
              1,478Total
                  assets
              
              $
              40,215**LIABILITIES
                  AND STOCKHOLDER'S DEFICIT****Current
                  liabilities:**Bank
                  overdraft
              
              $
              8,580Loans
                  and notes payable
              
              
              1,292,000Loans
                  and notes payable, related parties
              
              
              156,116Loan
                  payable due for software purchase, net of discount
              
              
              129,571Accounts
                  payable
              
              
              260,170Accounts
                  payable, related parties
              
              
              202,484Accrued
                  expenses
              
              
              1,170,634Accrued
                  expenses, related parties
              
              
              188,977Convertible
                  debentures
              
              
              84,912Payable
                  to shareholder
              
              
              900,027Embedded
                  conversion option liability
              
              
              163,780Other
                  liablilities
              
              
              14,289Total
                  current liabilities
              
              
              4,571,540Commitments
                  and contingencies (Note 10)**STOCKHOLDERS'
                  DEFICIT**Preferred
                  stock, $0.001 par value, 25,000,000 authorizedSeries
                  A, voting convertible preferred stock, 100,000shares
                  authorized, 35,000 shares issued and outstanding(liquidation
                  value $0.50 per share)
              
              
              35Common
                  stock, $0.001 par value, 400,000,000 authorized,118,468,172
                  issued and outstanding
              
              
              79,956Common
                  stock issuable, at par value (5,004,969 shares)
              
              
              5,005Common
                  stock issuable, Class A non voting, $.001 par value, 100,000,000
                  shares
                  authorized, 100,000,000 shares issued and outstanding
              
              
              100,000Common
                  stock and Common Stock, Class A subscriptions receivable
              
              
              (1,285,000
              )Additional
                  paid-in capital
              
              
              7,757,746Accumulated
                  deficit
              
              
              (11,189,067
              )Total
                  stockholders' deficit
              
              
              (4,531,325
              )Total
                  liabilities and stockholders' deficit
              
              $
              40,215
  See
        accompanying notes to consolidated financial statements
 3
 Vocalscape
          Networks, Inc. and Subsidiary
 Consolidated
          Statements of Operations
 (Unaudited)
  Three
                  Months Ended
              
              Six
                  Months EndedJune
                  30,
              
              June
                  30,**2007**
              
              **2006**
              
              **2007**
              
              **2006**Revenue
              
              $
              39,250
              
              $
              43,351
              
              $
              49,761
              
              $
              144,318Cost
                  of revenue
              
              
              739
              
              
              3,589
              
              
              1,478
              
              
              16,740Gross
                  profit
              
              
              38,511
              
              
              39,762
              
              
              48,283
              
              
              127,578Costs
                  and expenses:Compensation
              
              
              166,940
              
              
              85,646
              
              
              343,797
              
              
              118,969Consulting
              
              
              101,737
              
              
              172,670
              
              
              255,353
              
              
              284,294Professional
                  fees
              
              
              65,585
              
              
              75,036
              
              
              48,403
              
              
              207,129Bad
                  debts
              
              
              
              
              
              -
              
              
              
              
              
              -General
                  and administration
              
              
              47,971
              
              
              75,690
              
              
              114,816
              
              
              160,784382,233
              
              
              409,042
              
              
              762,369
              
              
              771,176Loss
                  from operations
              
              
              (343,722
              )
              
              (369,280
              )
              
              (714,086
              )
              
              (643,598
              )Other
                  income (expense)Loss
                  on conversion
              
              
              -
              
              
              (220,000
              )
              
              -
              
              
              (220,000
              )Interest
                  expense
              
              
              (158,192
              )
              
              (32,715
              )
              
              (299,422
              )
              
              (225,760
              )Change
                  in fair value of embedded conversionoption
                  liability
              
              
              (63,780
              )
              
              -
              
              
              (63,780
              )
              
              -Settlement
                  expense
              
              
              -
              
              
              (1,414,000
              )
              
              -
              
              
              (1,414,000
              )Bad
                  debt recovery
              
              
              -
              
              
              20,873
              
              
              -
              
              
              20,873Writeoff
              
              
              -
              
              
              -
              
              
              -
              
              
              (22,602
              )Other
                  Income
              
              
              -
              
              
              6
              
              
              -
              
              
              6Foreign
                  currency transaction gain (loss), net
              
              
              15
              
              
              (3,105
              )
              
              (3,269
              )
              
              (6,409
              )Total
                  other income (expense)
              
              
              (221,957
              )
              
              (1,648,941
              )
              
              (366,471
              )
              
              (1,867,892
              )Net
                  loss
              
              $
              (565,679
              )
              $
              (2,018,221
              )
              $
              (1,080,557
              )
              $
              (2,511,490
              )Net
                  loss per share - basic and diluted
              
              $
              (0.01
              )
              $
              (0.24
              )
              $
              (0.01
              )
              $
              (0.46
              )Weighted
                  average shares outstandingduring
                  the period
              
              
              79,750,408
              
              
              8,259,964
              
              
              93,562,405
              
              
              5,504,780
  See
        accompanying notes to consolidated financial
        statements
 4
 Vocalscape
          Networks, Inc. and Subsidiary
 Consolidated
          Statements of Cash Flows
 (Unaudited)
 Six Months Ended June 30,2007
              
              2006**Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (1,080,557
              )
              $
              (2,511,490
              )Adjustments
                  to reconcile net loss to net cashused
                  by operating activities:Depreciation
                  and amortization
              
              
              4,851
              
              
              4,852Amortization
                  of debt discount
              
              
              169,519
              
              
              160,000Deferred
                  consulting fees amortization
              
              
              146,667
              
              
              -Stock
                  options granted for services
              
              
              14,029
              
              
              -Stock
                  options exercises paid for with services
              
              
              1,850
              
              
              -Non
                  cash loan fee
              
              
              20,000
              
              
              -Foreign
                  currency transaction loss
              
              
              1,143
              
              
              -Non
                  cash revenues
              
              
              (17,290
              )
              
              -Change
                  in fair value of embedded conversion option liability
              
              
              63,780
              
              
              -Loss
                  on debt conversion
              
              
              -
              
              
              280,000Loss
                  on debt settlement
              
              
              -
              
              
              1,414,000Changes
                  in other assets and liabilities:Other
                  assets
              
              
              -
              
              
              (2,200
              )Deferred
                  revenue
              
              
              -
              
              
              (45,000
              )Accounts
                  payable
              
              
              33,513
              
              
              18,105Accounts
                  payable, related party
              
              
              (4,943
              )
              
              59,175Accrued
                  expenses
              
              
              (28,613
              )
              
              48,515Accrued
                  expenses, related aprties
              
              
              174,659
              
              
              -Net
                  cash used in operations
              
              
              (501,392
              )
              
              (574,043
              )**Cash
                  flows from investing activities:**Acquisition
                  of property and equipment
              
              
              -
              
              
              -Acquisition
                  of software for development
              
              
              -
              
              
              -Net
                  cash used in investing activities
              
              
              -
              
              
              -**Cash
                  flows from financing activities:**Bank
                  overdraft
              
              
              4,257
              
              
              -Payment
                  of expense for Vocalscape, Inc.
              
              
              
              
              
              (7,364
              )Loan
                  proceeds from related party
              
              
              4,700
              
              
              -Proceeds
                  from common stock sales
              
              
              197,738
              
              
              165,398Prepaid
                  liability for stock subscription
              
              
              
              
              
              45,000Repayment
                  of notes payable
              
              
              -
              
              
              (5,000
              )Loan
                  proceeds
              
              
              280,000
              
              
              410,612Net
                  cash provided by financing activities
              
              
              486,695
              
              
              608,646Net
                  increase (decrease) in cash and cash equivalents
              
              
              (14,697
              )
              
              34,603Cash
                  and cash equivalents, beginning of period
              
              
              14,697
              
              
              -**Cash
                  and cash equivalents, end of period**
              
              $
              -
              
              $
              34,603**Supplemental
                  disclosure of cash flow information:**Cash
                  paid during the period for:Interest
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              -
              
              $
              -**Supplemental
                  disclosure of non-cash investing and****financing
                  activities:**Conversion
                  of debt to common stock
              
              $
              120,000
              
              $
              235,000Conversion
                  of debt to preferred stock
              
              $
              -
              
              $
              5,000Assignment
                  of debt from creditors to related party shareholder
              
              $
              -
              
              $
              900,027Settlement
                  of accrued liabilites with common stock
              
              $
              -
              
              $
              86,000Recording
                  of beneficial conversion value to debt discount and APIC
              
              $
              60,000
              
              $
              -Record
                initial fair value of embedded conversion option as debt
                discount
              
              $
              100,000
              
              $
              -Exchange
                  of accounts payable for common stock on exercise of
                  options
              
              $
              37,900
              
              $
              -Recording
                  of deferred consulting
              
              $
              60,000
              
              $
              -Stock
                subscription
              
              $
              1,000,000
              
              $
              -
  See
        accompanying notes to consolidated financial
        statements
  5
  **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
 **1.**
                **NATURE
                    OF BUSINESS AND GOING
                    CONCERN**
  **Nature
        of Business and Current Operations –** Vocalscape Networks, Inc. and Subsidiary (VNOS) is a developer of Voice over
        Internet Protocol (VoIP) telephony solutions. VNOS provides VoIP telephony
        solutions and communications software for Internet Service Providers (ISPs),
        Internet Telephony Service Providers (ITSPs) and Telecommunications companies
        worldwide. VNOS develops VoIP and interactive communications software, including
        Soft phone applications, Customer Acquisition and Billing Systems, SIP Servers,
        Gatekeepers and Virtual Calling Cards. VNOS’s strategy is to focus on VoIP
        software and Long Distance termination solutions that bring together a full
        range of communications solutions and services thereby providing a turn-key
        VoIP
        infrastructure for ISP’s, ITSP’s and Telecommunications companies.
 
 **Organization
        –** VNI
        is a
        Nevada corporation, which was incorporated on June 12, 1998.
 
 VNOS
        is a
        Nevada corporation, which was incorporated on February 5, 2003.
 
 **Recapitalization** - On
        October 28, 2005, Vocalscape, Inc. (“VSI”) and Dtomi, Inc. (“Dtomi”) announced
        that on October 4, 2005, Dtomi and its wholly owned subsidiary Vocalscape
        Networks, Inc. (Subsidiary) (“VNI OLD”) effected a merger pursuant to that
        certain Agreement and Plan of Reorganization (the “Agreement”) by and between
        Dtomi and VSI dated August 25, 2005. Effective October 4, 2005, the date
        that
        Articles of Merger effecting the merger were filed with the Nevada Secretary
        of
        State, VNI OLD became a wholly owned subsidiary of Dtomi. Pursuant to the
        amended Agreement, Dtomi issued shares of its common stock with voting rights
        equal to 82% (1,138,889 common shares) of the voting power of the stockholders
        of Dtomi, to VSI in exchange for VNI OLD merging into a wholly owned subsidiary
        of Dtomi. The business of VNI OLD became the primary business of Dtomi.
        Subsequent to the recapitalization, Dtomi changed its name to Vocalscape
        Networks, Inc. and the subsidiary changed its name to Vocalscape Networks
        Operating Subsidiary, Inc.
 
 Due
        to
        the change in control of Dtomi, the transaction was accounted for as a
        recapitalization of VNI OLD.
 
 Accordingly,
        the financial statements of the Company consists of the historical operations
        of
        VNI OLD from its inception, and the operations of Dtomi from the
        recapitalization date. The Company assumed approximately $2.3 million of
        liabilities and deferred stock based costs of approximately $842,000 and
        is
        deemed to have issued 250,129 common shares to the existing pre-recapitalization
        shareholders of Dtomi. All share and per share data in the accompanying
        financial statements has been retroactively adjusted for the effect of the
        recapitalization.
  6
 
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
  **Going
        Concern –** The
        accompanying financial statements have been prepared in conformity with
        accounting principles generally accepted in the United States of America,
        which
        contemplate continuation of the Company as a going concern. The Company had
        a
        net loss in the first six months of 2007 of $1,080,557, net cash used in
        operations in the first six months of 2007 of $501,392, and working capital
        deficit of $4,571,540, accumulated deficit of $11,189,067 and stockholders’
deficit of $4,531,325 at June 30, 2007.
  These
        conditions raise substantial doubt about the Company’s ability to continue as a
        going concern. These consolidated financial statements do not include any
        adjustments to reflect the possible future effect on the recoverability and
        classification of assets or the amounts and classifications of liabilities
        that
        may result from the outcome of these uncertainties.
  In
        order
        to execute its business plan, the Company will need to raise additional working
        capital and generate additional revenues. There can be no assurance that
        the
        Company will be able to obtain the necessary working capital or generate
        additional revenues to execute its business plan. During the first six months
        of
        2007, the Company generated revenues from customer consulting agreements
        and
        raised capital through initiating a Regulation S offering by VSI and entering
        into additional Promissory Notes.  Management
        believes the continuation of revenues combined with additional capital raises
        and additional promissory notes will provide the Company the ability to continue
        as a going concern.
 
 **2.**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING
                  PRINCIPLES**
 
 **Principles
        of Consolidation –** The
        consolidated financial statements include the accounts of Vocalscape Networks,
        Inc. (the “Company” or “VNI” or “Vocalscape”) and it’s wholly owned subsidiary
        Vocalscape Networks Operating Subsidiary, Inc. (“VNOS”). All material
        intercompany balances and transactions have been eliminated in consolidation.
  **Cash
        and Cash Equivalents -** The
        Company classifies as cash equivalents any investments which can be readily
        converted to cash and have an original maturity of less than three months.
        At
        times cash and cash equivalent balances at a limited number of banks and
        financial institutions may exceed insurable amounts. The Company believes
        it
        mitigates its risks by depositing cash or investing in cash equivalents in
        major
        financial institutions.
  **Investments** -
        Certain securities that the Company may invest in may be determined to be
        non-marketable. Non-marketable securities where the Company owns less than
        20%
        of the investee are accounted for at cost pursuant to APB No. 18, "The Equity
        Method of Accounting for Investments in Common Stock" ("APB 18").
  Management
        determines the appropriate classification of its investments at the time
        of
        acquisition and reevaluates such determination at each balance sheet date.
        The
        cost of investments sold is based on the specific identification
        method.
  7
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
  The
        Company periodically reviews its investments in non-marketable securities
        and
        impairs any securities whose value is considered non-recoverable. The Company's
        determination of whether a security is other than temporarily impaired
        incorporates both quantitative and qualitative information. GAAP requires
        the
        exercise of judgment in making this assessment for qualitative information,
        rather than the application of fixed mathematical criteria. The Company
        considers a number of factors including, but not limited to, the length of
        time
        and the extent to which the fair value has been less than cost, the financial
        condition and near term prospects of the issuer, the reason for the decline
        in
        fair value, changes in fair value subsequent to the balance sheet date, and
        other factors specific to the individual investment. The Company's assessment
        involves a high degree of judgment and accordingly, actual results may differ
        materially from the Company's estimates and judgments.
  **Fair
        Value of Financial Instruments -** The
        following methods and assumptions were used by the Company in estimating
        its
        fair value disclosures for financial instruments:
  ·
              Cash
                  and cash equivalents: The carrying amount reported in the balance
                  sheet
                  for cash approximates its fair
                  value.
 ·
              Accounts
                  payable: Due to their short-term nature, the carrying amounts reported
                  in
                  the balance sheet for accounts payable approximate their fair value.
 ·
              Notes
                  payable: The carrying amount of the Company’s notes payable approximate
                  their fair value.
  **Property
        and Equipment -** Property
        and equipment are recorded at cost, net of accumulated depreciation.
        Depreciation is calculated by using the straight-line method over the estimated
        useful lives of the assets, which is five to seven years for all categories
        except for internal use computer software, which is depreciated over three
        years. Leasehold improvements are amortized over the life of the lease if
        it is
        shorter than the estimated useful life. Repairs and maintenance are charged
        to
        expense as incurred. Expenditures for betterments and renewals are capitalized.
        The cost of property and equipment and the related accumulated depreciation
        are
        removed from the accounts upon retirement or disposal with any resulting
        gain or
        loss being recorded in operations.
  **Impairment
        of Long-Lived Assets -** The
        Company evaluates its long-lived assets and intangible assets for impairment
        whenever events or change in circumstances indicate that the carrying amount
        of
        such assets may not be recoverable. Recoverability of assets to be held and
        used
        is measured by a comparison of the carrying amount of the asset to the future
        net undiscounted cash flows expected to be generated by the asset. If such
        assets are considered to be impaired, the impairment to be recognized is
        the
        excess of the carrying amount over the fair value of the asset.
  8
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 **Software
        Development Costs -** Costs
        incurred in connection with the development of software products are accounted
        for in accordance with Statement of Financial Accounting Standards (“SFAS”) No.
        86, *“Accounting
        for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed.”* Costs
        incurred prior to the establishment of technological feasibility are charged
        to
        research and development expense. Software development costs are capitalized
        after a product is determined to be technologically feasible and is in the
        process of being developed for market. Amortization of capitalized software
        development costs begins upon initial product shipment. Capitalized software
        development costs are amortized over the estimated life of the related product
        (generally thirty-six months), using the straight-line method. The Company
        evaluates its software assets for impairment whenever events or change in
        circumstances indicate that the carrying amount of such assets may not be
        recoverable. Recoverability of software assets to be held and used is measured
        by a comparison of the carrying amount of the asset to the future net
        undiscounted cash flows expected to be generated by the asset. If such software
        assets are considered to be impaired, the impairment to be recognized is
        the
        excess of the carrying amount over the fair value of the software asset.
 
 No
        software development costs were amortized during the years ended December
        31,
        2004 and 2003 as the product was not considered to be generally released
        until
        2005. The sales recorded during 2004 occurred prior to the general release.
        Amortization was recorded in 2006 and 2007 and is included in cost of
        revenues.
 
 **Intangible
                  Assets -**The Company records goodwill and intangible assets arising from
                  business
                  combinations in accordance with SFAS No. 141 “Business Combinations”
                  (“SFAS 141”) which requires that the purchase method of accounting be used
                  for all business combinations initiated after June 30, 2001. SFAS
                  141 also
                  specifies the criteria applicable to intangible assets acquired
                  in a
                  purchase method business combination to be recognized and reported
                  apart
                  from goodwill.
  The
        Company accounts for goodwill and intangible assets in accordance with SFAS
        142.
        In accordance with SFAS 142, the Company does not amortize goodwill. SFAS
        142
        requires that goodwill and intangible assets with indefinite useful lives
        no
        longer be amortized, but instead be tested at least annually for impairment.
        SFAS 142 also requires that intangible assets with definite useful lives
        be
        amortized over their respective estimated useful lives to their estimated
        residual values, and be reviewed for impairment.
 
 **Contingencies** -
        Certain
        conditions may exist as of the date financial statements are issued, which
        may
        result in a loss to the Company, but which will only be resolved when one
        or
        more future events occur or fail to occur. Company management and its legal
        counsel assess such contingent liabilities, and such assessment inherently
        involves an exercise of judgment. In assessing loss contingencies related
        to
        legal proceedings that are pending against the Company or unasserted claims
        that
        may result in such proceedings, the Company's legal counsel evaluates the
        perceived merits of any legal proceedings or unasserted claims as well as
        the
        perceived merits of the amount of relief sought or expected to be sought
        therein. If the assessment of a contingency indicates that it is probable
        that a
        liability has been incurred and the amount of the liability can be estimated,
        then the estimated liability would be accrued in the Company's financial
        statements. If the assessment indicates that a potentially material loss
        contingency is not probable but is reasonably possible, or is probable but
        cannot be estimated, then the nature of the contingent liability, together
        with
        an estimate of the range of possible loss if determinable would be
        disclosed.
  9
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
  **Revenue
        Recognition** -
        The
        Company is engaged as a seller of VoIP telephony solutions. The Company
        generally recognizes revenue in accordance Securities and Exchange Commission
        Staff Accounting Bulletin 104, *“Revenue
        Recognition”* when
        persuasive evidence of an arrangement exists, delivery has occurred, the
        fee is
        fixed or determinable and collectibility is probable. Specifically, the Company
        recognizes software revenue in accordance with Statement of Position (“SOP”)
        97-2, *“Software
        Revenue Recognition,”* as
        amended by SOP 98-4, “ *Deferral
        of the Effective Date of a Provision of SOP 97-2* ,”
and
        SOP 98-9, “ *Modification
        of SOP 97-2 With Respect to Certain Transactions* ”
and *EITF
        00-21 “Revenue Arrangements with Multiple Deliverables”.*
 
 The
        Company sells bundled solutions which may consist of the software, configuration
        services, support services, customization and future upgrades. The Company
        defers recognition of the software sales until configuration is completed
        as
        they are considered one unit of accounting. Support services are considered
        a
        separate unit of accounting and such fees are recognized as services are
        provided. Future upgrades or enhancements and customizations are considered
        separate units of accounting and related fees are recognized as those upgrades
        or enhancements are provided.
 
 **Stock
        Based Compensation -** On
        January 1, 2006, the Company implemented Statement of Financial Accounting
        Standard 123 (revised 2004) (“SFAS 123(R)”), “Share-Based Payment” which
        replaced SFAS 123 “Accounting for Stock-Based Compensation” and superseded APB
        Opinion No. 25, “Accounting for Stock Issued to Employees.” In
        March
        2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) regarding
        its
        interpretation of SFAS 123R. SFAS
        123(R) and related interpretations requires the fair value of all stock-based
        employee compensation awarded to employees to be recorded as an expense over
        the
        related requisite service period. The statement also requires the recognition
        of
        compensation expense for the fair value of any unvested stock option awards
        outstanding at the date of adoption. The Company values any employee or
        non-employee stock based compensation at fair value using the Black Scholes
        Pricing Model. In adopting SFAS 123(R), the Company used the modified
        prospective application (“MPA”). MPA requires the Company to account for all new
        stock based compensation to employees using fair value, and for any portion
        of
        awards prior to January 1, 2006 for which the requisite service has not been
        rendered and the options remain outstanding as of January 1, 2006, the Company
        should recognize the compensation cost for that portion of the award that
        the
        requisite service was rendered on or after January 1, 2006. The fair value
        for
        these awards is determined based on the grant-date. There was no accounting
        effect of applying the MPA method.
  10
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
  **Foreign
        Currency Transactions** - The
        Company’s corporate offices are located in New York in the United States and its
        operating offices are located in Canada. Although the Company’s accounts are
        maintained in U.S. dollars, the Company does maintain one Canadian dollar
        bank
        account and engages in various transactions resulting in deposits and
        disbursements to and from that bank account.
 
 Revenue
        and expense items transacted in Canadian dollars are translated using the
        average rate of exchange prevailing during the period. Gains and losses
        resulting from foreign currency transactions are recognized in operations
        of the
        period incurred.
 
 **Income
        Taxes -** The
        Company accounts for income taxes using the liability method, which requires
        the
        determination of deferred tax assets and liabilities based on the differences
        between the financial and tax bases of assets and liabilities, using enacted
        tax
        rates in effect for the year in which differences are expected to reverse.
        Deferred tax assets are adjusted by a valuation allowance, if based on the
        weight of available evidence it is more likely than not that some portion
        or all
        of the deferred tax assets will not be realized.
 
 **Use
                  of Estimates in Financial Statements -**The presentation of financial statements in conformity with accounting
                  principles generally accepted in the United States of America requires
                  management to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities and disclosure of contingent
                  assets and
                  liabilities at the date of the financial statements and the reported
                  amounts of revenues and expenses during the reporting period. Actual
                  results could differ from those estimates. Significant estimates
                  in 2007
                  and 2006 include the valuation of stock-based payments, valuation
                  of
                  beneficial conversion feature on convertible debt and valuation
                  allowance
                  on deferred tax assets.
 
 **Net
        Earnings (Loss) Per Share -** Basic
        earnings (loss) per common share is based on the weighted-average number
        of all
        common shares outstanding. The computation of diluted earnings (loss) per
        share
        does not assume the conversion, exercise or contingent issuance of securities
        that would have an anti-dilutive effect on earnings (loss) per
        share.
  The
        Company has not issued any warrants or options since its inception in February
        2003. Upon the recapitalization in October 2005, the Company assumed outstanding
        warrants as follows: At December 31, 2005 there were warrants to purchase
        41,347
        shares at an exercise price of $72.00 expiring December 31, 2006; 214 shares
        at
        an exercise price of $.40 expiring December 31, 2006 and 1,250 shares at
        an
        exercise price of $100.00 expiring December 31, 2009. Total warrants outstanding
        at December 31, 2005 were 42,811. There were also options outstanding to
        purchase 2,276 common shares at $40 per share and 229 common shares at $38
        per
        share.
  11
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 As
        of
        December 31, 2006, all warrants had expired except for 1,250. At June 30,
        2007
        there were also 2,505 options outstanding.
 
 The
        exercise of such warrants and options may dilute future earnings per share.
 
 **Recently
        Issued Accounting Standards -**
 
 In
        May
        2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”
which replaces Accounting Principles Board Opinion (“APB”) No. 20, “Accounting
        Changes”, and SFAS No. 3, “Reporting Accounting Changes in Interim Financial
        Statements-An Amendment of APB Opinion No. 28.” SFAS 154 provides guidance on
        the accounting for and reporting of accounting changes and error corrections.
        SFAS 154 is effective for accounting changes and a correction of errors made
        in
        fiscal years beginning after December 15, 2005 and did not have a material
        effect on our consolidated financial statements.
 
 In
        July
        2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes — an Interpretation of FASB Statement No. 109, Accounting for
        Income Taxes” (FIN 48) to create a single model to address accounting for
        uncertainty in tax positions. FIN 48 clarifies the accounting for income
        taxes
        by prescribing a minimum recognition threshold a tax position is required
        to
        meet before being recognized. FIN 48 also provides guidance on derecognizing,
        measurement, classification, interest and penalties, accounting in interim
        periods, disclosure and transition. FIN 48 is effective for fiscal years
        beginning after December 15, 2006. We are currently evaluating the impact
        of
        adopting FIN 48 and do not expect the adoption of FIN 48 will have a material
        impact on our Consolidated Financial Statements.
  In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS
        No. 157 defines fair value and applies to other accounting pronouncements
        that
        require or permit fair value measurements and expands disclosures about fair
        value measurements. SFAS No. 157 is effective for fiscal years beginning
        after
        November 15, 2007 and interim periods within those fiscal years. We are
        currently evaluating the impact of adopting SFAS No. 157 on our Consolidated
        Financial Statements.
  In
        September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, to
        address diversity in practice in quantifying financial statement misstatements
        and the potential for the build up of improper amounts on the balance sheet.
        SAB
        No. 108 identifies the approach that registrants should take when evaluating
        the
        effects of unadjusted misstatements on each financial statement, the
        circumstances under which corrections of misstatements should result in a
        revision to financial statements, and disclosures related to the correction
        of
        misstatements. SAB No. 108 is effective for the fiscal year ending December
        31,
        2006. The adoption of SAB No. 108 did not have a material impact on our
        Consolidated Financial Statements.
  12
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 **Reclassifications**
 
 Certain
        amounts in the 2006 consolidated financial statements have been reclassified
        to
        conform with the 2007 presentation.
 
 **3.**
              **INVESTMENT
                  IN NON-MARKETABLE EQUITY
                  SECURITIES**
 
 The
        composition of non-marketable securities at June 30, 2007 is as follows:
 
 **Cost**
              
              **Fair
                  Value**Equity
                  securities
              
              $
              17,290
              
              $
              17,290
 
 During
        April 2007 the Company received 2.1 million equity securities of a customer
        based in Europe. These securities were received from this private company
        as
        payment for services rendered. The value of the securities could not be
        determined and the value of the services was also not determinable, therefore
        the Company valued the securities at a nominal value equal to the par value
        of
        the securities or $17,290 which the Company believes is below the value of
        services provided. This amount was recorded as revenues.
 
 **4.**
              **PROPERTY
                  AND EQUIPMENT**
 
 Property
        and equipment at June 30, 2007, consists of the following:
 
 Office
                  equipment
              
              $
              35,854Accumulated
                  depreciation
              
              
              (14,407
              )Property
                  and equipment, net
              
              $
              21,447
  Depreciation
        during 2007 and 2006 was $3,373 and $3,373, respectively.
 
 **5.**
              **DEVELOPMENT
                  COSTS**
 
 Capitalized
                  software development cost consists of the following at June 30,
                  2007:
 
 Cost
              
              $
              8,869Accumulated
                  amortization
              
              
              (7,391
              )Software,
                  net
              
              $
              1,478
 
 During
        January 2004 the Company capitalized $136,538 relating to a suite of software
        products purchased by a related party and assigned to the Company with the
        related liabilities (see Notes 7 and 9). The related liabilities due to the
        seller are collateralized by the purchased software. These products had already
        reached the point of technological feasibility prior to the Company’s purchase
        and needed some modifications by the Company to bring the product to market.
        Accordingly, no amortization had been charged to operations as of December
        31,
        2004. Due to the lack of available resources during 2004 and subsequent,
        the
        Company did not allocate the resources to this project and instead allocated
        resources to other software projects being developed internally. Accordingly,
        since the Company could not reliably project any positive cash flows from
        this
        asset, the Company has recorded an impairment loss of $136,538 at December
        31,
        2004. During December 2004, the Company recorded $8,869 of software costs
        for
        certain VoIP products, which it had been developing internally and had reached
        technological feasibility. During the year ended December 31, 2004, the Company
        had no amortization expense. During 2005 the Company recognized $ 2,956 of
        amortization expense, upon general release of the software product. During
        2006
        the Company recognized $2,956 of amortization expense. During the first six
        months of 2007 the Company recognized $1,478 of amortization
        expense.
  13
  **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
 6.
                  **NOTES
                      PAYABLE, NOTES PAYABLE RELATED PARTIES AND CONVERTIBLE
                      DEBENTURES**
  Notes
        payable to related and unrelated parties consists of the following at June
        30,
        2007:
 
 Note
                  payable to the related party principal shareholder and officer
                  of the
                  Parent and to companies owned or controlled by him; due on demand;
                  unsecured; with interest at prime plus 2% to 3% (10.25% to 11.25%
                  at June
                  30, 2007)
              $
              97,116Note
                  payable to law firm, due on demand, non-interest bearing
              
              59,000Subtotal
                  - Notes payable related parties
              
              156,116Notes
                  payable to two individuals with interest accruing at 10%
              
              159,000Notes
                  payable to six individuals; due on demand; unsecured; with interest
                  at
                  prime plus 3% (11.25% at June 30, 2007)
              
              1,133,000Subtotal
                  - Notes payable unrelated parties
              
              1,292,000Total
                  Notes Payable
              $
              1,448,116
 
 The
        weighted average interest rate on short term outstanding as of June 30, 2007
        was
        10.66 %.
 
 **Convertible
        Debentures** - In
        October 2005, upon recapitalization, the Company assumed four 10% one-year
        convertible debentures to four individuals for $11,698, $60,705, $6,121 and
        $6,388 cash. These debentures had been issued in October and November 2004.
        The
        debentures are convertible into 2,123 common shares based on a conversion
        rate
        of $40 per share. The embedded conversion options were determined not to
        be
        derivatives at the issuance date or as of June 30, 2007 since the debt qualifies
        as conventional convertible debt. Based upon the conversion rate at the issuance
        date, there was no beneficial conversion feature recorded.
  14
  **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
 **Convertible
        Promissory Notes and Conversion**
 
 In
        February 2007, the Company issued a convertible promissory note for $120,000.
        The note principal is convertible into 3,000,000 shares of common stock.
        Management has determined that this note qualifies as conventional convertible
        debt pursuant to SFAS 133 and EITF 00-19 and accordingly the embedded conversion
        option is not a derivative. The convertible promissory note was to be converted
        into common stock in March 2007. The Company computed a beneficial conversion
        value of $60,000 based on the quoted stock price on the grant date of $.06
        per
        share. The $60,000 was recorded as a debt discount and credited to additional
        paid-in capital. The debt discount was amortized to interest expense in March
        2007 when the note was to be automatically converted into stock. The Company
        received proceeds on the note of $100,000 and they were charged $20,000 as
        a
        loan fee. The loan fee was charged to interest expense in March 2007. Since
        the
        stock had not been issued as of June 30, 2007, it is included in the attached
        balance sheet as issuable shares.
 
 On
        April
        30, 2007 the Company issued a convertible promissory note for $150,000. The
        Company received $100,000 of the proceeds from this note during the second
        quarter and $50,000 in July 2007 and therefore has recorded a note payable
        of
        $100,000 as of June 30, 2007. The note bears interest at prime plus three
        percent, is due on demand and is collateralized by non-marketable equity
        securities owned by the Company (see Note 3). The note holder has the option
        to
        convert the note into Common Stock of the Company within 365 days of the
        note
        date at the lessor of 50% of the closing market price of the Common Stock
        on the
        date the written notice is provided by the holder of the note or $0.10 per
        share. Management of the Company has determined that the note is a derivative
        and contains an embedded conversion option since the variable conversion
        rate
        causes an inability to guarantee that there will be enough authorized shares
        available if the holder elects to convert. The Company recorded an embedded
        conversion option liability on this note of $169,596. This created a change
        in
        fair value of the embedded conversion options of $69,596 that was recorded
        as an
        other expense. Since the note is due on demand, the Company recognized $100,000
        of interest expense on the debt discount. At June 30, 2007 the Company adjusted
        the embedded conversion option liability to fair value and decreased it by
        $5,816 due to changes in market value. The $5,816 was credited to expense
        in
        June 2007. The embedded conversion option was valued using the Black-Scholes
        model with the following assumptions in May 2007 and June 30, 2007: stock
        price
        $0.02 and $.015, exercise price of $.01 and $.0075, volatility of 242%, term
        of
        1 year and .83 years, and interest rate of 4.8%.
 
 The
        Company also determined that all other common stock equivalent securities
        including the convertible debentures, warrants and options, but excluding
        conventional convertible debt, may require classification as liabilities
        due to
        the authorized shares problem. However, due to the relatively large conversion
        and exercise prices of these other instruments, the fair value of the
        liabilities at all dates from April 2007 through June 30, 2007 was
        zero.
  15
  **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
 **7.**
              **LOAN
                  PAYABLE FOR SOFTWARE
                  PURCHASE**
 
 In
        2004 a
        liability was recorded relating to a software purchase. The software purchase
        price was $200,000 Canadian dollars (“CA$”) payable with CA$26,096 down payment
        and CA$10,842 payable per quarter commencing May 1, 2004 and on August 1,
        November 1, February 1 and May 1 in each year thereafter until the purchase
        price is paid in full. In accordance with APB 21, “Interest on Receivables and
        Payables,” the Company imputed interest at 6% or CA$21,845 on this loan payable.
        This resulted in an initial loan payable balance translated to US dollars
        of
        $136,538, net of discount of $16,742, an initial payment made of $20,000
        (recorded as a note payable to the related party assignor of the purchase
        agreement) and quarterly payments of approximately $8,309 as adjusted for
        foreign currency transaction gains or losses.
 
 The
        loan
        payable balance at June 30, 2007 was as follows:
 
 Loan
                  payable
              
              $
              131,746Debt
                  discount
              
              
              (2,175
              )Loan
                  payable, net of discount
              
              $
              129,571
 
 This
        loan
        payable is collateralized by the software asset. Additional interest in the
        amount of $5,522 was accrued in 2007. The loan is currently in
        default.
 
 **8.**
              **STOCKHOLDERS’
                  DEFICIT**
 
 **Recapitalization
        -** In
        October 2005, VNI OLD was acquired by Dtomi, Inc., a public shell, in a
        transaction accounted for as a recapitalization of the Company. All authorized,
        issued and outstanding share and per share data in the accompanying consolidated
        financial statements has been retroactively adjusted to reflect the
        recapitalization. (See Note 1)
 
 **Authorized
        Shares** - In
        January 2007, the Company amended its Articles of Incorporation to increase
        the
        number of authorized common shares to 400,000,000. The Company also authorized
        100,000,000 new Class A common shares at a par value of $0.001 per share.
        The
        changes in capitalization are reflected retroactively in the accompanying
        consolidated Balance Sheet.
 
 **Preferred
        Stock -** The
        Company has authorized 25,000,000 shares of preferred stock. The Board of
        Directors at its discretion may determine the rights and preferences of the
        preferred stock. In December 2005 the Company designated 100,000 shares as
        Series A Convertible Preferred Stock (“Series A shares”). The Series A shares
        upon issuance and consideration received by the Company is convertible to
        common
        stock on a one-for-one basis at a minimum of 50 shares per conversion. The
        conversion rate is not adjustable except for standard anti-dilution provisions,
        such as stock splits, reorganization or recapitalizations. Upon liquidation
        the
        Series A stockholders would receive $0.50 per share plus any unpaid dividends.
        Each Series A share has voting rights equal to 5,000 common shares. On January
        20, 2006 the Company accepted a subscription from its CEO to purchase 20,000
        Series A shares in exchange for a $5,000 portion of a promissory note due
        to the
        CEO. Such note was previously due to a controlled affiliate of the CEO and
        assigned to the CEO by that affiliate. In October 2006, the CEO resigned
        and
        executed an employment agreement as Head of Business Development. Among other
        compensation the employment agreement grants 15,000 Series A preferred shares
        as
        compensation. The shares are valued at $0.25, the same amount he previously
        paid
        and expensed immediately since it was not material.
  16
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 **Common
        Stock Issued for Cash and Subscriptions Receivable**
 
 During
        2007 the Company sold 48,054,781 common shares for net proceeds of $167,738
        pursuant to a Regulation S Stock Purchase Agreement.
 
 In
        May
        2007 the Company entered into a subscription agreement with an individual
        to
        purchase 100,000,000 shares of the Class A non voting common stock of the
        Company. The total sales price is $1,000,000. It is to be paid in four blocks.
        The Company issued the first block of 25,000,000 shares on July 11, 2007.
        All
        100,000,000 shares are reflected in the accompanying balance sheet as common
        stock issuable and a subscription receivable at June 30, 2007. The Company
        expects to receive payment in August or September 2007 for the first block
        of
        shares issued in July 2007.
 
 **Common
        Stock Issued for Exercise of Stock Options**
 
 In
        January 2007 the Company issued 225,000 common shares upon exercise of a
        stock
        option at $.04 per share. The exercise price was paid for with a payable
        that
        was due to the option holder. In May 2007, the company issued 575,000 common
        shares to the same option holder upon exercise of a stock option at $.01
        per
        share in exchange for a payable of $5,750.
 
 In
        March
        2007 the Company issued 3,000,000 common shares upon exercise of stock options
        at $.01 per share and received the $30,000 exercise price in cash.
 
 In
        March
        2007 the Company issued 1,000,000 common shares upon exercise of stock options
        at $.02 per share which was paid for $18,150 with a payable due to the option
        holder and the remaining $1,850 was expensed as a professional fee.
  17
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
  In
        June
        2007, the company issued 500,000 common shares upon exercise of stock options
        at
        $.01 per share in exchange for a payable of $5,000.
 
 **Common
        Stock Issued Upon Conversion of Note**
 
 In
        2007 a
        note holder converted a $120,000 convertible promissory note at $.04 and
        the
        Company issued 3,000,000 shares. (See Note 6)
 
 **Grants
        of Options to Purchase Common Stock**
 
 In
        January 2007 the Company granted 225,000 common stock options to a law firm
        for
        services provided. The options were valued at $7,876 ($.035 per option) using
        a
        Black-Scholes option pricing model with the following assumptions: stock
        price
        $0.075, exercise price of $.04, volatility of 282%, term of 1 day, and interest
        rate of 4.8%. The term of 1 day was used since as intended the recipient
        exercised their options immediately on the grant date. (See above) The Company
        recognized $7,876 in expense.
 
 In
        March
        2007 the Company granted options for 3,000,000 common shares at an exercise
        price of $.01 per share pursuant to a consulting agreement. The options were
        valued at $60,000 ($.02 per option), using a Black-Scholes option pricing
        model
        with the following assumptions: stock price $0.03, exercise price of $.01,
        volatility of 282%, term of 1 day, and interest rate of 4.8%. The term of
        1 day
        was used since as intended the recipient exercised their options immediately
        on
        the grant date (see above). The value is to be recognized over the requisite
        service period and accordingly, $50,000 was deferred as of March 31, 2007.
        During the second quarter of 2007 $50,000 of the deferred consulting was
        expensed.
 
 In
        March
        2007 the Company granted 1,000,000 common stock options to a consultant for
        services. The options were valued using a Black-Scholes option pricing model
        with the following assumptions: stock price $0.021, exercise price of $.02,
        volatility of 282%, term of 1 day, and interest rate of 4.8%. The term of
        1 day
        was used since as intended the recipient exercised their options immediately
        on
        the grant date. (See above) The Company recognized $1,763 in
        expense.
 
 In
        May
        2007, the Company granted 575,000 options to a law firm for services provided.
        The options were valued at $2,877 ($.005 per option) using a Black-Scholes
        option pricing model with the following assumptions: stock price $0.015,
        exercise price of $.01, volatility of 242%, term of 1 day, and interest rate
        of
        4.8%. The term of 1 day was used since as intended the recipient exercised
        their
        options immediately on the grant date. The Company recognized $2,877 in
        expense
 
 In
        June
        2007 the Company granted 500,000 options to a consultant for services provided.
        The options were valued at $1,513 using a Black-Sholes Option Pricing Model
        with
        the following assumptions: stock price $0.013, exercise price of $.01,
        volatility of 242%, term of 1 day, and interest rate of 4.8%. The term of
        1 day
        was used since as intended the recipient exercised their options immediately
        on
        the grant date. The Company recognized $1,513 in expense.
  18
 
 **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
  **Warrants** - Upon
        the recapitalization in October 2005, the Company assumed outstanding warrants
        as follows: At December 31, 2005 there were warrants to purchase 41,347 shares
        at an exercise price of $72.00 expiring December 31, 2006; 214 shares at
        an
        exercise price of $.40 expiring December 31, 2006 and 1,250 shares at an
        exercise price of $100.00 expiring December 31, 2009. Total warrants outstanding
        at December 31, 2005 were 42,811. At December 31, 2005, 2,632 options
        exercisable at $72.00 had expired and are excluded from the above balance.
        As of
        December 31, 2006, all warrants had expired except for the 1,250 at an exercise
        price of $100 which expire December 31, 2009. (See Note 6)
 
 **Options**
 
 A
        summary
        of the options issued to employees and assumed in the recapitalization and
        changes during the second quarter ending June 30, 2007 and 2006 is presented
        below.
 
 Number
                  of
                Options
              
              Weighted
                Average
                Exercise
                  PriceBalance
                  at January 1, 2006
              
              
              2,505
              
              $
              38.20Granted
              
              
              7,500,000
              
              
              .0474Exercised
              
              
              (7,500,000
              )
              $
              .0474Expired
              
              
              -
              
              $
              80.00Balance
                  at December 31, 2006
              
              
              2,505
              
              $
              38.20Weighted
                  average fair value of options granted during the year
              
              
              
              
              $
              .0474Balance
                  at January 1, 2007
              
              
              2,505
              
              
              38.20Granted
              
              
              5,300,000
              
              
              .014Exercised
              
              
              (5,300,000
              )
              $
              .014Expired
              
              
              -Balance
                  at June 30, 2007
              
              
              2,505
              
              $
              38.20Weighted
                  average fair value of options granted during the year
              
              
              
              
              $
              .0165
 
 19
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 The
        following table summarizes information about employee stock options outstanding
        at June 30, 2007:
 
 Options
                  Outstanding
              
              Options
                  ExercisableRange
                  of Exercise Price
              
              Number
                  Outstanding at June 30, 2007
              
              Weighted
                  Average Remaining Contractual Life
              
              Weighted
                  Average Exercise Price
              
              Number
                Exercisable
                  at
                June
                  30, 2007
              
              Weighted
                  Average Exercise Price$
              40
              
              229
              
              0.39
                  Years
              $
              40.00
              
              229
              $
              40.00$
              38
              
              2,276
              
              1.25
                  Years
              $
              38.00
              
              2,276
              $
              38.002,505
              
              
              $
              38.20
              
              2,505
              $
              38.20
 
 **9.**
              **RELATED
                  PARTY TRANSACTIONS**
  Notes
        payable to a related party director or his affiliates were $97,116 at June
        30,
        2007.
 
 At
        June
        30, 2007 accrued expenses to related parties amounted to $188,977 which includes
        $20,109 of accrued interest
 
 In
        October 2006 the Company accepted a $165,000 subscription promissory note
        from a
        Director (former officer) as payment for the exercise of his 3,000,000 stock
        options. Management believes this amount may be materially offset, with the
        director’s approval, against loans and accrued compensation due to this director
        or his controlled affiliates. Loans and accrued compensation due to this
        director at June 30, 2007 was $265,984.
 
 Certain
        officers and directors of the Company remain as officers and directors of
        the
        former parent, Vocalscape, Inc. now known as Nevstar.
 
 The
        Company has an agreement with a related party director dated August 25, 2005
        for
        legal services with his law firm whereby the related party is periodically
        issued vested non-forfeitable common shares of the Company so the director
        shall
        hold 4.9% of the issued and outstanding common shares and any proceeds from
        the
        sale of such shares by the related party are credited against invoice amounts
        due to that related party for legal services. The agreement has no stated
        term.
        Due to the contingent nature of the proceeds and the unstated term of the
        legal
        service agreement, the fair value of any shares issued will be expensed when
        issued. The related party invoices are accrued to accounts payable, periodically
        paid in cash and the accounts payable and legal expenses are credited for
        any
        proceeds in the period the proceeds are received by the related party and
        reported to the Company. As of June 30, 2007 proceeds in the amount of $
        42,871
        were reported to the Company in 2007. These proceeds were credited to legal
        expenses and reduced the payable to the related party. No additional shares
        were
        issued as the director held in excess of 4.9% of the common stock of the
        Company. At June 30, 2007 accounts payable to this law firm were $202,484
        and
        included in accounts payable, related parties. In addition a loan payable
        to the
        law firm was $59,000 and included in loans and notes payable, related parties.
        Expenses incurred by the Company during 2007 to this law firm were a credit
        of
        ($4,943) due to the $42,871 credit above.
  20
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 **10.**
              **COMMITMENTS
                  AND CONTINGENCIES**
 
 **Commitments**
 
 The
        Company is a party to a five-year office lease agreement covering 2,238 square
        feet, which commenced July 1, 2005, for the office in Vancouver, British
        Columbia. The lease provides for 22 monthly payments of $2,238 Canadian dollars
        (“CDN”) with two free months during the first 24 months of the agreement; 24
        monthly payments of $2,331 CDN during the third and fourth years of the
        agreement; and 12 monthly payments of $2,425 CDN during the final year of
        the
        agreement. In addition, the agreement provides for a monthly common area
        maintenance charge of $1,585 CDN.
 
 The
        Company is a party to a second office lease agreement, with a two-year term,
        covering 1,435 square feet, which commenced March 1, 2005, for the office
        in
        White Plains, New York. The agreement calls for monthly rental of $2,350.
        The
        lease expired on February 28, 2007 and the Company pays $2,500 per month,
        on a
        month to month basis.
 
 The
        Company enters into sales agent and distributor agreements to sell its products.
        These agreements are primarily commission based. There were no commissions
        payable as of June 30, 2007.
 
 **Legal
        Matters**
 
 The
        Company continues to receive claims from a prior director of Dtomi, Inc.
        relating to periods prior to the October 2005 recapitalization transaction
        with
        the Company.  The cash amounts the director claims he is due total
        approximately $520,000 and the total shares he claims he is due are estimated
        by
        the Company to be approximately 6,300. These amounts appear to relate to
        prior
        license or other alleged agreements between the director and the Company. 
The Company has accrued $86,000 in prior license fees due and has accounted
        for,
        in a prior period of Dtomi, Inc. approximately 15,278 common shares issued
        by
        the transfer agent in the director’s name. The director claims he never received
        2,778 of the 15,278 shares or other anti-dilution shares.  Management of
        the Company disputes the remaining cash amounts and believes no anti-dilution
        shares are due (which would account for the remaining 3,522 shares) since
        the
        license agreement was terminated in early 2005 by the licensor.  Management
        believes it will prevail in this matter.  Accordingly, no accruals have
        been made for the disputed amounts. The termination of the Patent License
        Agreement terminates these and other obligations during 2005. In May of 2006
        the
        director entered into an agreement with a third party whereby the director
        assigned his rights to any financial obligations made by the Company. In
        consideration of such assignment to such third party, the director was to
        receive a payment of $15,000.
  21
 **Vocalscape
            Networks, Inc. and Subsidiary**
 **Notes
            to Consolidated Financial Statements**
 **June
            30, 2007**
 **(Unaudited)**
 In
        July
        and August 2005 the Company received correspondence from a former officer
        and
        former employee regarding threatened material litigation relating to alleged
        compensation due to each employee. Although the Company disputes such amounts,
        these amounts aggregating $ 687,407 had been previously accrued in a period
        prior to 2005 and are reflected in accrued expenses at June 30,
        2007.
 
 **11.**
              
              **CONCENTRATIONS**
 
 **Revenues
        -** During
        2007, the Company had revenues from 3 customers. **** During
        2006, the Company had revenues from 5 customers.
 
 **12.**
              **ACCRUED
                  EXPENSES**
 
 Accrued
        expenses at June 30, 2007 consist of the following:
 
 Accrued
                  compensation
              
              $
              687,407Accrued
                  license fees
              
              
              36,000Accrued
                  interest
              
              
              333,077Accrued
                  expenses - other
              
              
              114,150Total
              
              $
              1,170,634
 
 **13.**
              **SHARE
                  EXCHANGE AGREEMENT**
 
 On
        February 26, 2006, Vocalscape and Azatel Communications Inc., a British Columbia
        corporation (“Azatel”), and all of the shareholders of Azatel (the
“Shareholders”), entered into a Share Exchange Agreement (the “Share Exchange
        Agreement”), pursuant to which Vocalscape shall acquire all of the issued and
        outstanding shares of common shares of Azatel in a transaction valued at
        approximately $118,000.  Under the Share Exchange Agreement, Vocalscape
        shall issue 200,000 shares of its common stock to the Shareholders, who number
        three persons, in exchange for all of their respective shares of Azatel (the
        “Share Exchange”).   Azatel had taken the position that the Share
        Exchange Agreement is terminated.  Vocalscape did not believe that the
        Share Exchange Agreement is terminated. Therefore, the company had fully
        reserved $22,601, which is the amount advanced through March 31, 2006. On
        June
        19, 2006 the Company received CAN$23,804 pursuant to a settlement agreement
        signed on May 23, 2006 wherein the Share Exchange Agreement was terminated.
        The
        company has recorded the amount received of $20,873 as a bad debt recovery
        in
        June 2006.
  22
  **Vocalscape
          Networks, Inc. and Subsidiary**
 **Notes
          to Consolidated Financial Statements**
 **June
          30, 2007**
 **(Unaudited)**
  **14.**
              **PAYABLE
                  TO SHAREHOLDER**
 
 During
        the second quarter of 2006 one of the shareholders of the Company, who is
        a
        former director who resigned during the second quarter, was assigned certain
        debts of the company pursuant to assignment agreements between the shareholder
        and creditors as follows:
 
 Payable
                  to Vocalscape, Inc. former parent (n.k.a. Nevstar)
              
              $
              265,617Former
                  officer note payable and accrued compensation
              
              
              214,410Accounts
                  payable to related party attorney
              
              
              420,000Total
              
              $
              900,027
 
 There
        was
        no consideration given by the Company to assign these debts. They were assigned
        from the vendors directly to the shareholder in a private transaction between
        those parties.
 
 **15.**
              **SUBSEQUENT
                  EVENTS**
 
 In
        July
        2007 the Company received a loan for $50,000 in exchange for a convertible
        promissory note that bears interest at prime plus three percent and is
        collateralized by stock owned by the Company. This loan was part of a $150,000
        note that was issued on April 30, 2007. (See note 6)
 
 In
        July
        2007, the company issued 25,000,000 Class A non voting common shares related
        to
        subscription agreement with an individual. (See note 8)
 
 In
        July
        2007, the Company issued 27,432,350 common shares in exchange for $51,600 net
        proceeds under the Regulation S offering.
 
 23





**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.**





**MANAGEMENT’S
      DISCUSSION AND ANALYSIS**




You
      should read the following discussion and analysis of our financial condition
      and
      results of operations together with our financial statements and related notes
      appearing elsewhere in this Form 10-QSB. This discussion and analysis contains
      forward-looking statements that involve risks, uncertainties and assumptions.
      Our actual results may differ materially from those anticipated in these
      forward-looking statements.




**OVERVIEW**





The
      following discussion relates to the business of Vocalscape Networks, Inc.,
      which
      includes the operations of its wholly owned subsidiary Vocalscape Operating
      Subsidiary, Inc., which holds assets through which Vocalscape provides services
      in connection with its business. Vocalscape is a next generation communications
      provider that provides Voice over Internet Protocol (“VoIP”) solutions. The
      current business of Vocalscape is the result of a merger of Dtomi, Inc. with
      Vocalscape Networks, Inc. on October 4, 2005, a date prior to which Vocalscape
      Networks, Inc. was not affiliated with the Company, and the Company was named
      “Dtomi, Inc.” Until October 4, 2005, the Company was named “Dtomi, Inc.”, and
      was a Florida-based, company that was developing the Air Spring Axle system,
      a
      suspension system for small and medium sized trailers.


24


**PRODUCTS
      AND SERVICES**




Vocalscape
      provides VoIP telephony solutions and communications software for Internet
      Service Providers (“ISPs”), Internet Telephony Service Providers (“ITSPs”) and
      telecommunications companies worldwide. Vocalscape develops VoIP and interactive
      communications software including Softphone applications, Customer Acquisition
      and Billing Systems, SIP Servers, Gatekeepers and Virtual Calling Cards.
      Vocalscape’s strategy is to focus on VoIP software and long distance termination
      solutions that bring together a full range of communications solutions and
      services thereby providing a turn-key VoIP infrastructure for ISPs, ITSPs and
      Telecommunications companies. Additionally, Vocalscape is actively seeking
      and
      negotiating strategic alliances with companies.





**COMPETITION**





The
      market for VoIP telephony software and services is relatively new and is quickly
      evolving and subject to rapid technological change. The VoIP telephony market
      has also seen significant consolidation and this trend is projected to continue.
      The companies following companies are not meant to be an exhaustive list of
      competitors to Vocalscape, but represent the largest and most active
      participants in this market: Deltathree, VocalTec Communications Ltd. and
      Net2Phone.





Vocalscape’s
      software solutions operate on the customer’s choice of hardware. Our software
      solutions support our customer’s choice of business models including, pre-paid,
      post-paid or monthly subscriber billing systems. Vocalscape’s product offerings
      are designed to streamline subscriber provisioning and subscriber services
      online.





**DEVELOPMENT**





Vocalscape
      has a team of engineers with software and systems industry experience. These
      engineers and management have significant experience in telecommunications,
      communication and control systems development. Vocalscape will be able to bring
      to market its products in a timely fashion while retaining the IP, and producing
      a superior product with high reliability and quality. Our core team is
      overseeing the development of: 1) a seamless 911 Dashboard designed to integrate
      multiple 911 service providers and 2) an IP PBX subscriber system, enabling
      resellers to service business customers online with a self-managed telephone
      system.




**DISTRIBUTION
      & MARKETING**





Vocalscape
      has a direct sales team and will build an indirect or reseller sales force.
      Direct resources will target the ISP’s, ITSP’s and Alternative Providers with
      the residential VoIP solution. Indirect channels will include VARs that supply
      the growing VoIP provider market with IP PBX solutions.





The
      direct sales force will also utilize web based leads (generated by search
      engine, blog, publication and email marketing) and outbound telemarketing to
      go
      directly after the solution sales clients. A select number of tradeshows will
      be
      attended to build the Vocalscape brand and the awareness of the solutions and
      product offerings from the company.




**GOING
      CONCERN**




Our
      company has nominal revenues and has incurred net losses in the six months
      ended
      June 30, 2007, of $1,080,557 and net cash used in operations of $501,392 in
      the
      six months ended June 30, 2007. Our current liabilities exceed our current
      assets by $4,571,540 and we have an accumulated deficit and stockholder’s
      deficit of $11,189,067 and $4,531,325, respectively, at June 30, 2007. These
      conditions give rise to substantial doubt about Vocalscape’s ability t o
      continue as a going concern. Vocalscape’s ability to continue developing its
      operations and generate revenues or its ability to obtain additional funding
      will determine its ability to continue as a going concern. Our consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





25




**RESULTS
      OF OPERATIONS**




The
      Company recorded revenues of $49,761 for the six months ending June 30, 2007,
      as
      compared to revenues of $144,318 for the six months ending June 30,
      2006.





General
      and administrative expenses decreased to $114,816 for the six months ending
      June
      30, 2007, a decrease of 28.6% over expenses of $160,784 for the six months
      ending June 30, 2006. General and administrative expenses in this first half
      of
      2007 consist primarily of rent, telephone, travel sales and other general
      corporate and office expenses.




Interest
      expense was $299,422 for the six months ending June 30, 2007, an
      increase of 32.6% over expense of $225,760 for the six months ending June 30,
      2006. This interest expense consists of interest on various loans, and
      convertible debentures and amortization of debt discounts.




Compensation
      expense for the six months ending June 30, 2007, was $343,797, as compared
      to
      $118,969 for the six months ending June 30, 2006. Compensation expense for
      the
      current year consists of salaries paid to employees and the Company’s
      officers.




Professional
      fees decreased to $48,403 for the six months ending June 30, 2007, a
      decrease of 76.6% compared to an expense of $207,129 for the six months ending
      June 30, 2006. These consist of primarily of legal and accounting fees in 2006
      as a result of the Company being a reporting issuer under the Securities
      Exchange Act of 1934, as amended. In 2007, the net professional fees are lower
      due to credits from a related party legal services provider.




Consulting
      fees expense for the six months ending June 30, 2007 was $255,353, an increase
      of 10% over expenses of $284,294 for the six months ending June 30, 2006. The
      consulting fees 2007 primarily relate to amounts paid to non-officer and
      director persons performing services on behalf of Vocalscape.




The
  net loss for the six months ending June 30, 2007 is $1,080,557 (net loss per
  share of $0.01), compared to a net loss for the six months ending June 30, 2006
  of $2,511,490 (net loss per share of $0.46).




**LIQUIDITY
      AND CAPITAL RESOURCES**




The
      Company has cash and cash equivalents of $0.00, total current liabilities of
      $4,571,540 and total assets of $40,215 at June 30, 2007. The Company continues
      to incur costs, but has not secured adequate new revenue to cover the costs.
      The
      Company does not currently have an adequate source of reliable, long-term
      revenue to fund operations. As a result, Vocalscape is completely dependent
      on
      outside sources of capital funding to continue operations. There can be no
      assurances that the company will in the future achieve a consistent and reliable
      revenue stream adequate to support continued operations. In addition, there
      are
      no assurances that the Company will be able to secure adequate sources of new
      capital funding, whether it is in the form of share capital, debt, or other
      financing sources.




**PLAN
      OF OPERATION FOR THE NEXT 12 MONTHS**




Vocalscape
      has limited cash and will only be able to satisfy its cash requirements through
      raising additional funds in the next 12 months.





The
      company recognizes that, without additional financing, the success of
      Vocalscape’s VOIP business is highly uncertain and Vocalscape must adapt its
      business operations to this reality. We are therefore seeking to broaden and
      transform our business base through the acquisition of innovative,
      value-differentiated products and services. Our focus is on revenue generating
      businesses poised for rapid growth that can benefit from being part of a public
      company and benefit from the sharing of resources and the sharing of costs
      associated with public filings and compliance.


26




We
      have
      limited funds with which to pursue the acquisition of new business
      opportunities, as we have generated losses since our inception. In our pursuit
      of acquiring new business opportunities, we anticipate needing additional funds
      to cover legal and accounting expenses, due diligence expenses and other costs.
      Subject to the availability of adequate financing, Vocalscape will continue
      to
      focus on providing services to our existing customers, marketing and selling
      our
      products to new customers and the continuous development of our products and
      services




**EVENTS
      SUBSEQUENT TO THE QUARTER ENDED JUNE 30, 2007**





On
      July
      16, 2007, we sold 25,000,000 shares of Class A Common Stock of the Company,
      at a
      purchase price of $.01 per share, under a subscription agreement to purchase
      100,000,000 shares. As of the filing date of this Form 10-QSB, the proceeds
      of
      $250,000 have not been received by the Company.





In
      July,
      2007, we sold 27,432,350 shares of common stock of the Company, at a purchase
      price of $.00188 per share, for aggregate proceeds of $51,600.




In
      July
      2007, we received the remaining $50,000 of proceeds relating to a $150,000
      convertible promissory note issued in April 2007.





**ITEM
      3. CONTROLS AND PROCEDURES.**





As
      of the
      period covered by this report, Vocalscape carried out an evaluation, under
      the
      supervision and with the participation of its management, including Ron
      McIntyre, Vocalscape’s President, who also currently acts as Vocalscape’s
      principal financial officer, of the design and operation of its disclosure
      controls and procedures. Based on this evaluation, Vocalscape’s President
      concluded that Vocalscape’s disclosure controls and procedures are effective for
      the gathering, analyzing and disclosing of information that Vocalscape is
      required to disclose in the reports it files under the Securities Exchange
      Act
      of 1934, within the time periods specified in the SEC’s rules and forms. There
      have been no significant changes in the Vocalscape’s internal controls or in
      other factors that could significantly affect the internal controls subsequent
      to the date of this evaluation.




**PART
      II. OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS.**





The
      Company is not currently subject to any legal proceedings. From time to time,
      the Company may become subjected to litigation or proceedings in connection
      with
      its business, as either a plaintiff or defendant. There are no such pending
      legal proceedings to which the Company is a party that, in the opinion of
      management, is likely to have a material adverse effect on the Company’s
      business, financial condition or results of operations.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS.**





None.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES.**





None.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**





None.




**ITEM
      5. OTHER INFORMATION.**





None.


27


**ITEM
      6. EXHIBITS.**





Exhibit
                Number
            
            Description3.1.1
            
            Articles
                of Incorporation of the Company (incorporated by reference to the
                Company’s Registration Statement on Form 10-SB 12G/A filed on November 26,
                1999).3.1.2
            
            Certificate
                of Amendment to Articles of Incorporation of the Company (incorporated
                by
                reference to the Company’s Registration Statement on Form 10-SB 12G/A
                filed on November 26, 1999).3.1.3
            
            Certificate
                of Amendment to Articles of Incorporation of the Company filed October
                25,
                2001 (incorporated by reference to the Company’s Quarterly Report on Form
                10-QSB filed on December 18, 2001).3.1.4
            
            Certificate
                of Amendment to Articles of Incorporation of the Company filed November
                6,
                2005 (incorporated by reference to the Company’s Annual Report on Form
                10-KSB filed on May 18, 2006).3.1.5
            
            Certificate
                of Amendment to Articles of Incorporation of the Company filed January
                3,
                2007 (incorporated by reference to the Company’s Annual Report on Form
                10-KSB filed on April 17, 2007).3.2.1
            
            Bylaws
                (incorporated by reference to the Company’s Registration Statement on Form
                10-SB 12G/A filed on November 26, 1999).31.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Principal Executive Officer and Principal Financial Officer Pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of
                2002.





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.





Vocalscape
                Networks, Inc.(Name
                of Registrant)Date:
                August 20, 2007
            By:
            /s/
                Ron McIntyreRon
                McIntyrePresident


28